Bullion traders expect Tihar to revive sales

Usually a merry season for bullion traders, Dashain was not a profitable affair for those involved in the business this year. Traders said that demand for the yellow metal was significantly low compared to the same period last year. They estimated that the market was down around 30 percent.

“This year’s Dashain festival turned out to be a big disappointment for bullion traders. Sales remained lower than anticipated,” said Mani Ratna Shakya, president of the Federation of Nepal Gold and Silver Dealers’ Association (Fenegosida). According to him, bullion sales normally used to pick up from the beginning of the Teej festival and continue till Tihar, the festival of lights which occurs two weeks after Dashain . However, the trend did not continue this year, as festive buyers began visiting jewellery stores only three to four days prior to the Dashain festival. 

According to Shakya, even during the market’s peak period this Dashain , daily demand was recorded at 25-30 kg. “Until last year, daily demand for bullion used to stand at around 35 kg on normal days and exceed 40-45 kg during the peak period,” said Shakya. Anticipating a rise in demand, even Nepal Rastra Bank had raised the gold import quota by 5 kg to 20 kg per day for a period three months starting from mid-September.

Traders attributed the slow business to loss of confidence among buyers regarding gold. “The price of gold jumped to Rs 62,000 per tola around eight months ago, and then stabilized at Rs 48,000. This is why people aren’t confident and willing to invest in gold,” Shakya said. The market saw a larger number of people visiting shops to sell their gold jewellery than to make a purchase, he added. 

On Oct 11 when the price of gold was last declared before the holidays started, it was traded at Rs 55,300 per tola. According to Fenegosida, almost all the jewellery stores across the country witnessed good footfall but business was another story altogether. Shakya said that most of the shoppers were seen to be in a wait and watch mode. “Many prospective buyers were inquiring about prices and they seemed to be waiting for them to drop,” said Shakya.   

Disheartened by the dismal performance of the market during Dashain , bullion traders are hoping that sales will rebound during Tihar. The domestic market witnesses the largest growth in sales of the yellow metal during the festival of lights. Moreover, Shakya said that Tihar would be promptly followed by the wedding season when demand is expected to grow massively for bridal jewellery.

source: the himalayan times,17 Oct 2013
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